The world is always moving, and right now, it is moving faster than ever. Companies are digitalizing on a bigger scale than ever seen before. A good example of the development is the music industry and how it has evolved. We went from buying records to downloading music to our MP3 players, and today we are streaming music through cloud-based applications like on our smartphones – like Spotify.
It is exactly the same development we see in finance. Finance professionals went from using paper and pencil to programs like Excel, and now finance departments worldwide implement cloud-based financial applications and software into the workflow. It can be an ERP system or a consolidation system that brings the agile cloud-technology into the finance department.
But why do we have to go on this digital journey? You might want to ask. The answer is simple: To stay relevant and to keep up with the development, finance departments and professionals must do things differently – must do things smarter!
This blog post will look at how you and your finance department can continue to be an asset to your business and management – also in the future. Business partnering is one of the ways to ensure that you and the finance department stay relevant to your organization.
Read on and dig deeper into how to take action and how to develop in order to be able to succeed with Finance Business Partnering.
Your role is changing – stay relevant with finance business partnering
Let us first establish why Finance Business Partnering is interesting. The role of finance professionals is changing in line with the increased digitalization of companies worldwide.
Slowly we are moving away from CFOs and Finance Managers just being number crunchers, working behind the scenes. Instead, finance professionals are going to collect data not behind a screen but out in the organization. Finance professionals will have to go out and talk to people in the organization and communicate data through insights that can influence decision-making.
It is from this point of view that Finance Business Partnering is interesting, because finance business partnering is all about digging deeper into data and making recommendations to management. This can ensure the company, as a whole, is able to maintain a competitive advantage.
To gain time for in-depth analysis and recommendations based on these, taking one step further in digitalizing the workflow is a great help. To be competitive, you need to adapt to changes also within technology. Otherwise, you will be run over by the companies who do adopt new technologies into their workflow. So, if you want to make yourself and your finance department relevant, digitalization is the way forward since it frees up time for working on in-depth analysis, which digs deep into the different areas of the business.
The core of finance business partnering
The most important part is: What do you do with the numbers? How do you use them? How do you share your insights with the management and the rest of the organization? And how do you influence their decisions?
These four questions are the core of finance business partnering, and this is what business partnering is all about. You can be the best finance professional in the world, but if you can’t make your numbers count at all to your business then you can not change management’s decisions for the better. To make this happen, finance professionals must spend their time differently and on other tasks than the ones you are spending time on today.
In the drawing below you see what tasks you spend your time on today, and the tasks you should focus on more.
©Business Partnering Institute
Finance professionals have to move from spending time on accounting and reporting, data and transactions to spend more time on insights and influence, analysing and forecasting.
Data, reports and analysis are important because you can not be a finance business partner without the numbers and the data to back up your insights. But where the finance professionals really can make a difference is when you share these insights, make recommendations, and influence the management’s decisions so they make better decisions and execute better.
Here the 3 I’s: Insight, Influence, and Impact come into play since it is here finance professionals should spend most of their time.
The role of a finance business partner is to share insight (I #1) which can be used to influence (I #2) the decisions of the management. The decisions should then have a positive impact on the business, and the financial team has had an impact (I #3) on the business development through insight and influence.
©Business Partnering Institute
The 3 I’s is ideally where the financial team should spend the most time. But as you can see on the graph above, 2/3rds of business partners’ time is spent on tasks which does not add that much value to the business as a whole. This is why finance departments have to digitalize, so certain tasks within the workflow can be automated. The financial team can then spend less time on data, reporting and accounting and more time on the 3 I’s: Insight, Influence, Impact.
Adapting to the future is a journey; you must begin today
To begin digitalizing certain aspects and automating tasks within the workflow is easy, but moving away from one role as a finance professional to another one is difficult. It is important to acknowledge this and to accept that this development is a long journey.
How we adapt to the future and how we adopt new ways of thinking, new technology and new methods of working is individual. To illustrate this and to be aware of how you are adopting new ways we will use the Innovation Adoption Lifecycle.
In the graph below, you will see a curve divided into five segments. The first segment is the Innovators. Innovators must try out the latest trends before anyone else, no matter if it is fully tested and flawless or not. Early adopters jump on board a new trend when it is starting to get bigger and more used by everyone, but it is still in the very early stage.
The Early majority is one of the two biggest segments on the Innovation Adoption Lifecycle. Here the trend has proven to be beneficial through some references. It is still relatively new, but it is tested and known to work. Then there is the Late Majority, which is just as big a segment as the early majority. The late majority adopts new trends when it is absolutely clear that it works and is efficient. At the bottom of the curve, we find the Laggards. The people and businesses who find themselves in this segment are the last ones to join the trend. Here you find people who are still not using smartphones, for instance.
©Business Partnering Institute
If you find yourself to the right of the curve, you need to find a way to move closer to the middle or beyond. Because if not then you are missing out on great opportunities while your competitors are outrunning you.
So, if you or your business are in one of the last two segments on the curve, you need to push further to the left. You can do this by stepping out of your comfort zone and embracing new ways of thinking and doing things. Start to embrace the new role of finance professionals by acquiring some of the new skill sets needed in order to succeed with finance business partnering.
New skills and mindsets are needed to succeed with finance business partnering
If you want to succeed with finance business partnering, you have to understand that it is all about people and changing mindsets. It is hard, but it can be done, and the sooner you start the better.
This new role of the finance professionals requires a skill set out of the ordinary personal profile of finance professionals. Most importantly, you must get out of your comfort zone. Introducing new ways of thinking and working means entering new areas where you cannot be as precise as you would like to be. You need to be able to compromise and dare to step outside your comfort zone to adopt new ways of working within finance. As a finance business partner, you must be more proactive, take more initiative, and be more willing to take risks. This is where finance professionals will have to work with themselves to succeed with finance business partnering and stay relevant to the business.
For that, you need to acquire and train yourself in new skills needed for your future role in finance. We all have our professional tool box that we use and work with every day. But that is not enough if you want to drive value creation in your company. Here you will have to learn to use some other skills together with your professional tools.
A capability model for a finance business partner could look like the figure below:
©Business Partnering Institute
As you see on the figure there are 4 main categories that create the value mindset. This is the mindset needed for becoming a successful business partner.
The first main category is the Analytical skills – the finance professionals’ home turf. But being a good analyst is not enough. You also got to stay up to date all the time regarding new tools and methods. Under analytical skills are also problem solving and LEAN which can be very useful, but these skills are some that you will have to build on top of your fundamental tool box.
Number two is Business skills where understanding the business model, strategy, and commercial acumen is at play. If you teach yourself to understand the business you are working in, you will be able to speak the same language as your business stakeholders. They will suddenly understand what you are saying because you are not just communicating numbers and tables any more. You are instead communicating what the financial data means to the business as a whole across departments.
Then there are the Leadership skills. It is important that the finance department is willing to take the lead, and of course, the one who has to lead the way for change and has to drive finance business partnering is the CFO. The CFO has to be at the forefront. Leading business partners is different from leading controllers or accountants because business partnering happens in relation to other people. It is not something which happens behind a screen; you need to get out to the organization and observe how your business partners are doing things in action.
In combination with the skills mentioned above, you have to build up some People skills. First and foremost it is about communication – not just of numbers and tables but of communicating your recommendations and why these can add value to the entire business. You have to be able to stand up in front of a number of people and show that you understand a certain problem and are able to come up with a clear action plan on how to address it.
It is important to remember, no one has all these skills from nature. But look at where you are strong and use this to recognize where you need to learn. If you are a very strong analyst, then you might have to work a bit more on going out into the business to meet people, communicate and influence based on your analysis.
It is not easy to make these changes – it will take a while to implement this development in the finance function. On the other hand, it is doable and can create a finance function that really adds value to the entire business.
Would you like to know more about how to succeed with finance business partnering?
Get concrete tips from Konsolidator’s CEO Claus Finderup Grove and Finance Business Partner expert Anders Liu-Lindberg in the webinar “Cracking the Nut of Finance Business Partnering: A Practical Approach”. You can watch the webinar on demand here.
Claus Finderup Grove, CEO at Konsolidator & Finance Business Partner Expert Anders Liu-Lindberg, Business Partnering Instirute.